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America's Edge In Capital Goods


Economic Trends

AMERICA'S EDGE IN CAPITAL GOODS

It's sparking an export boom

If there's any doubt that the U.S. economy is becoming more and more tied to the global economy, consider the following: Exports and imports of goods and services in the second quarter were equal to a record 28.4% of gross domestic product, up from 25.5% in 1996 and less than 21% five years ago.

But the real surprise in America's expanding trade sector in recent quarters has been the outstanding performance of U.S. exports. Economist Stephen S. Roach of Morgan Stanley, Dean Witter, Discover & Co. points out that fully 42% of the economy's 4.3% growth rate since last fall was thanks to a 24% surge in goods exports.

By way of comparison, Roach notes that the enormous consumer sector, which represents 68% of the economy, accounted for 51% of growth during the same period--only a bit more than the merchandise export sector that is less than one-seventh its size.

The secret of America's newfound trade prowess lies in its strong competitive edge in capital equipment, especially high-tech items. Some 78% of the recent increase in real merchandise exports reflects rising sales of capital goods, mainly computers, chips, and peripherals but also industrial and construction machinery and civilian aircraft.

With Europe's economies finally perking up and growth in Canada and Latin America accelerating, the outlook for continued export gains would appear to be good. The only cloud on the horizon seems to be the risk of widening turmoil in Southeast Asia. But the principal countries affected so far account for less than 10% of U.S. exports, and most observers don't see a big threat developing yet. Thus, if Asian problems don't spread and Europe's prospects continue to improve, U.S. capital-goods exports should strengthen even more.

"As country after country rushes to squeeze operating expenses by substituting capital for labor," says Roach, "America's competitive leadership in the global technology business promises to power the U.S. economy forward well into 1998."BY GENE KORETZReturn to top

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WHY MARRIED WOMEN WORK

Not just to boost family income

The conventional economic wisdom is that the main reason so many married women have entered the workplace in recent decades is to shore up family incomes in an era of scant wage growth--a response augmented by shifting gender roles and aspirations.

In a new study, however, economist Allen M. Parkman of the University of New Mexico suggests this is far from the whole story. For one thing, he notes that many working wives now come from higher-income households, and a big chunk of their added earnings is often eaten up by taxes, child care, and work-related expenses--sharply reducing the immediate economic gain.

Researchers also find that while married women now put in more total work hours (in their jobs and doing home tasks) than they used to, their husbands don't. "If wives are working harder," asks Parkman, "why aren't their husbands helping out more at home?"

The answer, according to Parkman, is related to how the high incidence of divorce in America has affected women's work decisions. Before the advent of no-fault divorce, he argues, the need to secure the cooperation of a spouse to obtain a divorce provided nonworking wives with strong leverage to secure decent divorce settlements. As no-fault divorce laws swept the nation in the 1970s and 1980s and the divorce rate surged higher, that leverage weakened, and many wives sought outside work to protect themselves from economic hardship in the event of a divorce.

To prove his point, Parkman analyzed nationwide survey data from 1981. He found that married women in states with no-fault divorce laws were not only more likely to be employed outside the home than their peers in states lacking such laws but that they also tended to put in significantly more hours of total work--some 4 1/2 hours a week.

Thus, concludes Parkman, with no-fault divorce now the national norm, many married women are taking jobs at least in part as insurance against the possible adverse financial effects of divorce. And the fact that many husbands are not pitching in more at home suggests an implicit awareness that more than "family welfare" is prompting their wives to earn that extra paycheck.BY GENE KORETZReturn to top


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